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PSERS Trustee Obtains Transparency Counsel After Being Denied Access to Important Financial Records

Senator Muth

HARRISBURG − May 12, 2021 − After weeks of unanswered questions and hollow explanations by PSERS staff and counsel, Senator Katie J. Muth, the Senate Democratic Policy Committee Chair, hired a national transparency law expert in her continuing quest to do her job as a board member of the embroiled Pennsylvania School Employees’ Retirement Fund. Muth hired Dilworth Paxson’s Terry Mutchler, founding executive director of the Pennsylvania Office of Open Records.

“My duty as a fiduciary is to protect the school employees’ and taxpayers’ hard-earned dollars,” said Muth, D-Berks/Chester/Montgomery, who was appointed by the President Pro Tempore of the Senate to the Board two months ago. “Being informed is a requirement of a fiduciary and a public servant.  Being informed means reading, reviewing, and analyzing data and information.  Despite asking many questions, requesting documents and materials regarding the fund’s operations and investments, I’ve been denied access to records that I am entitled to as a fiduciary.”

Muth decided to hire transparency counsel after repeated attempts to obtain basic answers regarding the investment performance calculations and investment procedures.  Prior to her appointment to the Board, the PSERS Board voted (11-0, with 3 abstentions) to certify the member contribution rate for fiscal year 2021-22 based upon calculations for investment performance. During the March 2021 Board Meeting, the Board was informed for the first time that those calculations overstated PSERS investment performance due to a calculation error. The PSERS Board hired independent counsel to conduct an internal investigation as to how the mistake was made and ascertain the actual numbers surrounding the investments. The difference in these calculations led to an increase in the contribution rate by PSERS members. Shortly after selecting the law firm Womble Bond Dickinson to conduct the internal investigation, PSERS has been served with federal grand jury subpoenas by the U.S. Attorney for the Eastern District of Pennsylvania related both to the error in investment performance as well as a probe into PSERS real estate investments.

Previously, Mutchler was appointed by former Gov. Ed Rendell to create the state agency tasked with enforcing the state’s right to know law. She was appointed Illinois’ first Public Access Counselor, served as Illinois Assistant Attorney General and now serves on the National Freedom of Information Coalition.  She is teamed with the leading government investigator Linda Dale Hoffa. Hoffa is the former Criminal Division Chief at the U.S. Attorney’s Office in Philadelphia. 

“These women are the gold standard in thorough, truth-seeking, internal investigations of taxpayer funded entities. Since attending my first board meeting two months ago, I’ve asked several staff members questions regarding board and staff investment processes and procedures, how various investments and internal controls are managed, and what information beneficiaries are given when receiving updates and the empty answers bundled with sham legalese explanations are offensive and unacceptable. I am grateful that I was able to find counsel that will help me uphold my fiduciary duty and ensure the truth is fully revealed,” Muth said. “Taxpayers, teachers, and other school employees deserve full transparency, socially and fiscally responsible investment staff and informed trustees. I am fully dedicated to fulfilling my duties as a fiduciary and will fight like hell to get answers to ensure accountability, transparency and for the financial security of the fund and its beneficiaries.”

 

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